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LTC Properties Inc. Message Board

  • doggydogworld doggydogworld Sep 6, 2000 7:46 PM Flag

    Subordination question

    In the Moody's downgrade they said:

    "The
    rating actions reflect the uncertainty surrounding the
    credit facility renewal and, if renewed, the potential
    implications of a secured credit facility which would
    structurally subordinate bond and preferred stock
    holders."

    Is preferred stock at par with unsecured debt?

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    • BAC is asking LTC mgmt to go to the bond and prfd
      holders and in essence asking them to structurally
      subordinate themselves to the new credit facility. It is
      possible for those parties to agree if they believe it is
      in their interest to do so.

      What does this
      mean? BAC does not believe in the valuation of assets
      to be there in the event of a downturn in healthcare
      again and are unwilling to do a refi w/o obtaining
      senior creditor status or as high as they possibly
      can.

      As to your analysis of the MT situation. I am of
      the belief that debt will move from the healthcare
      side to the lodging side when all is said and done.
      Any debt moving to the lodging side will be seen as a
      huge overhang on the stock's ultimate valuation once
      this process is completed. It does not matter how much
      debt is being reduced right now...today. It is the
      debt load that LQ inherits from the healthcare side
      that is the name of the game right now. Until LQ can
      show what its ops will look like post healthcare no
      one is willing to put a solid NAV on the successor
      MT. There are a lot of well educated guesses but
      nothing solid until healthcare has been entirely disposed
      of. LQ is not exactly a primo asset and it was
      overpaid for given today's operating environmt.

    • no, below it and accounts payable

 
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